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MNB1501
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Lecture notes of 19 pages for the course MNB 1501-Business Management 1A at Unisa (BUSINESS MANAGEMENT)
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Learning Unit 6The marketing instruments
INTRODUCTION AND AIM OF THE UNIT
Read section 13.10 in ITBM
A marketing mix is a combination of strategic tools used to create value for customers
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and achieve company objectives. There are four primary tools or elements in a marketing
mix: product, price, distribution (placement) and promotion. All successful businesses
include these four elements in their marketing strategies. For instance, McDonald’s of-
fer a wide variety of products at different prices, from Quarter Pounders to McChickens.
They have outlets in most suburbs, where it is easy for customers to park or drive in and
place orders, and they use many promotion methods to persuade customers to buy their
products, from advertisements on radio, television and magazines to sales promotions
such as competitions and discounts. This learning unit focuses on these four marketing
instruments: product, price, distribution and promotion.
STUDY CHAPTER 13 (section 13.10 – 13.15) IN ITBM
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Contents of this learning unit
−− Product decisions
−− Price decisions
−− Distribution decisions
−− Marketing communication decisions
64 Learning objectives
After completing this topic, you should be able to
yy describe the composition of a product by identifying the components and classification
categories of consumer products
yy analyse the product decisions that form part of the marketing strategy of a business by
highlighting decisions regarding the brand, packaging, product differentiation, obsoles-
cence, and multiproduct and new product decisions
yy explain how price decisions are taken in a business by summarising the price determina-
tion process and adaptations to the final price
yy demonstrate an understanding of the distribution strategy of a business by highlighting
decisions regarding the choice, channel leadership and physical distribution activities
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, MNB1601/001/4/2017
yy describe the marketing communication elements that can be used to communicate
with consumers by summarising decisions regarding advertising, personal selling, sales
promotion, publicity and public relations
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KEY TERMS
product offering price determination consumer final price adaptations
consumer products distribution channels profit channel leadership
brand decisions market coverage
packaging decisions advertising
kinds of packaging personal selling
packaging design sales promotion
product differentiation publicity
product obsolescence product life cycle
multiproduct decisions
new product development
public relations
Refer to the end of chapter 13 in the prescribed book to familiarise yourself with the key
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terms for this learning unit before continuing.
6.1 PRODUCT DECISIONS
Study section 13.11 in ITBM
A product is a bundle of perceived tangible and intangible attributes that has the po-
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tential to satisfy present and potential customer wants and is received in exchange for
money or other considerations. A person who goes for psychiatric counselling receives
an intangible service, while a person who buys a packet of paperclips buys a tangible
product. In between these two extremes, a person who buys a restaurant meal receives
a combination of an intangible service and a tangible product. Practically all the products
we buy are a combination of an intangible service and a tangible good. A product is thus
more than the physical article itself. It is the total package, which includes the service that
goes with it (e.g. the guarantees), the image of the product (e.g. the latest fashion shoes
that show the owner is “with it”) and the packaging (e.g. a high-quality gift wrapping
that adds to the “value” of a gift).
When planning an effective marketing strategy it is important to classify the type of
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consumer product being marketed. (Please note that the prescribed book concentrates
mainly on consumer products, which often differ from industrial and agricultural products.)
Consumer goods may be classified on the basis of consumer buying habits, even though
a watertight classification is not always possible, since the same product may be a luxury
speciality product for one customer and a shopping product for another. One consumer
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, may insist on buying only Youth Dew perfume from Estée Lauder. For her, perfume is
a speciality product. Another consumer may try out several perfumes before deciding
which one to buy. For her, perfume is a shopping product. The question the marketer of
perfume has to answer is: Do most women insist on a specific brand of perfume, or do
most of them “shop around”? The answer is that for most women, perfume is a speciality
product, since most of them insist on buying a specific product.
Each product has a life cycle that goes through four phases: the introductory phase,
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growth phase, maturity phase and declining phase. The actual cycle may vary from
product to product, as illustrated in figure 12.9 in your prescribed book, but the product
will eventually go through all four phases. For some products this life cycle is very short,
especially when it comes to fashion. For some products the life cycle may be very long.
Take the example of Pepsi-Cola. The product went through a declining phase in South
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Africa some years ago, but right now is in a revival cycle. How long will we still have Pepsi
on the market? Who knows?
One of the most important attributes of the product is the brand. A brand is a name, term,
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design, symbol, or any other feature that identifies one business’s product or service as
distinct from those of other businesses. Customers often say “I’d like to buy a Volvo”, or
“I have a craving for a Big Mac” or “We could really improve our presentation if we used
PowerPoint”. These are all brands that differentiate the products from those of competitors.
When a customer becomes committed to buying the same brand over and over again,
this is known as brand loyalty. Most consumers are brand loyal to one brand when they
purchase certain products such as cigarettes (e.g. Marlboro), mayonnaise (e.g. Crosse &
Blackwell) and toothpaste (e.g. Colgate).
Brands can be classified according to the ownership of the brand. A manufacturer’s brand
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is a brand that is owned and used by the producer of the product, for example Levi jeans.
A brand that is owned and used by a reseller (such as a retailer and wholesaler) is called a
dealer brand, for example Donna Claire is used by Foschini. Many stores also stock generic
brands, which are products named only by their generic class. Supermarket shoppers
can find products ranging from paper towels to dog food to peanut butter packaged as
generic products. Their packages bear no brand names or other seller identification, sim-
ply the type of product and any required information, such as ingredients on food items.
Companies have different options for their branding strategies. The option known as a
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family brand is a brand that is applied to an entire product mix or to all the products in a
particular line. Gillette Company uses the family brand Gillette Series for a line of men’s
shaving products, deodorants and aftershaves. To benefit from consumers’ positive views
of Gillette’s sensor razor, the company advertises the Gillette Series with the same slogan
used for the razor: “Gillette. The best a man can get.” A consumer who likes the sensor
razor might be favourably predisposed to try Gillette’s other men’s shaving products.
Companies can also use an individual brand for each product item, for example SAB
Miller has Amstel, Carling Black Label and Hansa Pilsener.
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